Don't be TOO RESPONSIBLE, or you might not get a loan

[jpnjim]

I'm having issues getting a home loan.

 

 

In a nutshell, my credit history is:

 

I've had a dozen or so credit cards since my first in 1987,

Over the years I voluntarily dropped all but the one I still use.

 

I've had zero late payments, penalties, etc.

 

I buy stuff on the card, but try not to carry a balance. (15K limit)

 

 

I got a mortgage in 1996,

Paid extra every month,

till it was paid off 19 years early,

in 2007.

I still live in that house.

 

That mortgage had no late payments, penalties, etc

 

 

I'm now looking for another house

(I'm trying to finance 2x's my yearly income)

I'll put 20% down, to avoid PMI.

 

 

Great, right?

 

 

Newp, not great!

 

Two of the three credit agencies said I don't have enough credit history,

and will not assign me credit scores.

 

(25 years of paid on time revolving credit, and a paid off mortgage are not enough credit history!)

 

Only one bank would even offer me a loan with just a single credit score (775).

 

The rest say they absolutely cannot do a loan without at least 2 of the 3 scores,

no matter how much the loan is for, or how much I put down. :doh:

[87Warrior]

Yep. I do not have much credit history due to my age. I only have one credit card and have always paid utility bills on time (if they even report?) and have paid cash for vehicles. My credit scores (all three) are good. But I tried to apply for a credit with my local bank and was declined due to lack of history. My wife, who has a handful of store credit cards and has a score several points less than mine was approved for the same credit card through our local bank. :hmm:

 

:huh???:

 

I don't get the who process and how they calculate risks/etc. But I will continue to maintain a zero balance on all debts if possible. It seems the safest to me and would make it more difficult to get into trouble. Well, except for a mortgage we will have in a month. :rotf:

[txjeeptx]

Without getting into politics, this is exactly what's wrong with the banking industry, and we haven't changed a thing about how they operate/gamble.

[Geonovast]

They won't make money on people who pay off loans early and don't pay interest on cards.

[dave92cherokee]

I feel your pain from the opposite end of the spectrum. I'm trying to rebuild my credit, cuz god knows EVERYTHING in this country has to do with credit score now. I've got a few collections on my report that will be paid off with tax return, a judgement that will be removed in august, and a score in the low 500's. Even though I've been at the same job for 5 years, renting a house and making timely payments every month for the same 5 years as well as a car loan in good standing for the past year nobody will do it because of that stupid number. So when we were trying to get financed for a house we liked every place i contacted said "there's nothing that we or anyone can do for you". So now only time will help. One of the guys at work had a good idea though go to a bank or somewhere and get a small loan like $2500 and then put that directly into a seperate account with automatic payments for the loan setup. That way it will rebuild your credit history and help the score and only end up costing what little bit of interest there would be.

[Zenobian_84]

Not only does the industry make no sense most of the time, it's for ridiculous reasons. My dad had a few credit cards, and was always making payments on time, but when he stopped using credit cards altogether and wanted to go get a loan on a house several years later (2011) he was denied because he DOESN'T have any credit cards as of right now.

 

:dunno: This is why I always use cash for everything; although this doesn't apply for everyone, my whole deal is, "If you don't have the money right then and there for something, don't buy it / finance it."

[Sir Sam]

Ya man, I feel ya. I went and looked through my credit history just a few days ago to see if there was anything I needed to dispute, nothing. 5+ years of house payments, credit cards, student loans, all on time. Credit score still a "C".

 

I'm thinking about trying to get another credit card(and not using it, just keeping it sitting around for emergency, or even just cutting it up). A card with no annual fee that I don't use only means I have more credit, the higher your credit/debt ratio the better your perceived credit. So someone with 10k in credit card debt out of a total of 20k has a better credit/debt ratio than someone with $1000 in debt out of $1500.

 

My parents credit is currently shot to hell because they just moved, apartment complex, utilities, etc etc all pulled a credit report, the more reports they pull the lower your score.

[b16gsr]

Hate to hear stories like this, but RESPONSIBLE credit card usage is almost a must today. I have been an AMEX member for almost 10 years, and prior top that had OK credit. I pay it off every single month ahead of the payment date, and believe that it has been a huge driving factor into my almost pefect credit history today.

 

Key word is RESPONSIBLE. I have several friends who are still paying on stupid college credit card debt many years later.

[jpnjim]

I was basing a lot of my actions on old, flawed, or just wrong information.

 

Years ago, having a high *available* CC balance was considered a bad thing,

because that represented potential future debt.

 

Having two many credit cards (even if unused)

would compound this.

 

Well, the rules have changed,

unused available credit now increases your Debt Ratio (= good, instead of bad)

 

within the new rules,

I listed the *Mistakes* I have made:

 

 

 

 

I canceled a 2nd credit card I did not like ($25k limit) in 2008.

Had I retained it, I would now have more than 1 (out of 3) credit score

 

I chose a small local bank to have an account with, that has reserve credit.

Being a small bank, they only report this reserve credit status to one of the three credit agencies

(that agency has given me a credit score)

If I had picked a big bank, that reports to all 3 agencies,

all 3 would be giving me scores, instead of just one

 

Bought our minivan last year cash, instead of pulling a loan

It was under $10k, but if I financed even $1k, or $2k of that,

I would have more than 1 credit score

 

I paid all my bills on time, with no 30 day lates, or collections

My GF has all the same exact credit history as me,

but HAS a credit score because a wrongly submitted $200 medical bill (bloodwork) was sent to collection.

They created a number for her, just so they could ding it. :fs1:

(her score is 110 points lower than the 1 score I have, due to that bill).

 

 

Even after paying off the house loan in 2007,

doing any one of the above would have given me enough 'credit history' to generate a credit number.

 

I know people with bankruptcies 2 years ago who could get a loan today,

because they have enough credit history.

 

25 years of on time credit card payments, a paid off mortgage makes me more of a credit risk than someone who went bankrupt in 2010 :doh: :doh: :doh:

[terrawombat]

:dunno: This is why I always use cash for everything; although this doesn't apply for everyone, my whole deal is, "If you don't have the money right then and there for something, don't buy it / finance it."

 

Paying cash is great and all, but it can hurt you at some point - like when you want to buy a house, send your child to college, pay for their wedding, or any other event that requires a large denomination of money in a short period of time. Paying with cash won't help your credit score (unless you were a credit card nut that always charged more than they had and never paid their bills on time) because there is no trace-ability and paper trails for the credit bureau's to follow.

 

I'm thinking about trying to get another credit card(and not using it, just keeping it sitting around for emergency, or even just cutting it up).

 

No, don't do that. What that will do is bring down the average age of open credit lines, which is taken into consideration for your credit score. Anything below an average age of 6 years is considered a poor reflection of credit. Instead, increase the credit limit on your current credit cards and continue your normal spending habits to make your credit score look better. The best credit card for this is an AMEX. After a certain period of time as an AMEX card holder and a history of on-time payments, you can pretty much increase your credit line to whatever you want with a simple phone call. I called up and had them increase mine to $15K (up from $7.5K) no questions asked.

 

My parents credit is currently shot to hell because they just moved, apartment complex, utilities, etc etc all pulled a credit report, the more reports they pull the lower your score.

 

What you're referring to is a "hard" credit pull - one that extracts your entire credit report. A "soft" pull is when you just check it online using any one of the five billion online credit monitoring agencies. I am VERY surprised that the apartment complex and the utility companies did a hard credit pull on your parents credit history. There is ZERO reason for them to dig any deeper than the three credit bureau scores for their purposes.

 

"Hard" credit pulls affecting your credit score have become a little more relaxed in the past year due do people wanting to "shop" for mortgage rates. Naturally, any mortgage lender is going to do a "hard" pull on your credit to obtain all prior history. Unfortunately, having too many "hard" pulls in a certain time period hurts your score, but there is absolutely nothing wrong with shopping around for the best rates. Even though the rules have relaxed some, my score still went down 12 points for going to two different banks when shopping for my mortgage. That kind of locked me into just sticking with the bank that gave me the better rate and not looking around any further as I don't want it to hurt my score any more.

 

I can go on and on about credit scores as it's something I've closely monitored since I was 16 and got my first credit card with my father in a joint account. He doesn't have great credit because of opening too many accounts and having a low average age for all his credit lines. He is also not very diversified with credit - never had a car loan, mortgage, or student loan - and pays with cash almost everywhere. He wanted me to be more educated about my credit so he taught me what not to do - which often seemed to be counter-intuitive, but that's just the way the credit bureau's are.

[terrawombat]

25 years of on time credit card payments, a paid off mortgage makes me more of a credit risk than someone who went bankrupt in 2010 :doh: :doh: :doh:

 

Unfortunately, it's all statistics and they can only see the kind of person that you are through numbers and algorithms to make sure that they won't screw themselves in the long run. I have had some very heated debated about credit, credit scores, debt, etc. and what it boils down to is this:

 

Educate yourself on today's credit score policies - how they score you, what to do/what not to do, and how to maintain it - and conform their backwards methods.

 

When I was 18, I began to conform and played by their rules, even if it felt wrong. I had a score of 680 back then and now I'm at 805 9 years later (would have been 827 if they didn't dock me 12 points for shopping around for mortage rates, but it will go back up in three months time).

[jpnjim]

Educate yourself on today's credit score policies - how they score you, what to do/what not to do, and how to maintain it - and conform their backwards methods.

 

 

 

My problem is,

according to TransUnion,

I don't have enough info for the FICO model to generate a number.

 

 

According to FICO,

I need:

 

http://www.myfico.com/CreditEducation/q ... score.aspx

 

What are the minimum requirements for a FICO score?

 

There's really not much to it; in order for a FICO® score to be calculated, a credit report must contain these minimum requirements:

 

* At least one account that has been open for six months or more

* At least one undisputed account that has been reported to the credit bureau with in the past six months

* No indication of deceased on the credit report (Please note: if you share an account with another person this may affect you if the other account holder is reported deceased).

 

My solo credit card meets requirement #1

(originated in 1999, $15k limit, 14% debt to credit ratio)

 

What would constitute "one undisputed account reported to the credit bureau",

to meet requirement #2?

 

 

edit,

any "undisputed accounts" you can think of that would report quickly,

like within a week, or two??

(Line 2 just says it has to have reported within the past 6 months,

not that it has to have existed for 6 months, or more)

[dfreeman616]

i had more typed out but it got deleted so here's the short version.

 

manual underwriting. that means no credit/fico score approval. most banks don't do this anymore, but some mortgage companies do and have reasonable rates/plans. the one that comes to mind is http://www.churchillmortgage.com/.

 

it's actually possible to not have debt, my goal is to have no credit score within 10-15 years, and i don't make that much money. the debt we have now is student loans that in hindsight i would have tried to pay without the loans, and our mortgage.

 

anyways, good luck on getting a mortgage. it sounds like you shouldn't have a problem qualifying with churchill's manual underwriting policies.

[jpnjim]

i had more typed out but it got deleted so here's the short version.

 

manual underwriting. that means no credit/fico score approval. most banks don't do this anymore, but some mortgage companies do and have reasonable rates/plans. the one that comes to mind is http://www.churchillmortgage.com/.

 

it's actually possible to not have debt, my goal is to have no credit score within 10-15 years, and i don't make that much money. the debt we have now is student loans that in hindsight i would have tried to pay without the loans, and our mortgage.

 

anyways, good luck on getting a mortgage. it sounds like you shouldn't have a problem qualifying with churchill's manual underwriting policies.

 

 

Thank you.

 

I will look into Churchill,

the mortgage companies we checked into all needed the two scores, but we did not check that one.

 

:cheers:

 

Glad to know there is a company that doesn't rely solely on FICO scores.

 

 

 

 

.......but after reading the FICO requirements for the 10th time,

I think I've been overlooking something this whole time. :doh:

 

 

 

Requirement #1 & #2 CAN be one, single credit card account (I think),

so long as that account is Undisputed.

 

5 years ago, I reported a Fraud Alert to the credit bureau (my SSN was on a stolen laptop with 5000 others, so I reported it to block any unauthorized usage).

 

When we first pulled my credit, it showed my one credit card as *disputed by customer* (due to the fraud alert)

 

I asked them to lift the dispute,

but it's possible my lack of a FICO score on two of the three agencies is still reflecting that Disputed Account.

 

:doh: :doh: :doh:

 

 

I am now really hoping that was it.

(I guess I will find out next week).

 

Thanks to all so far for answers, and suggestions

I knew I could count on you guys. :cheers: :thumbsup: